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REVEALED: Victims of Banking Misbehaviour Let Down by ‘Unfit for Purpose’ Resolution Service

Transparency campaigners and victims of banking bad behaviour have raised concerns that strict eligibility criteria of the available resolution service is cutting them off from support, reports Sian Norris

The City of London, home to the UK’s biggest banks. Photo: Pere Sanz/Alamy

REVEALED: Victims of Banking Misbehaviour Let Down by ‘Unfit for Purpose’ Resolution Service

Transparency campaigners and victims of banking bad behaviour have raised concerns that strict eligibility criteria of the available resolution service is cutting them off from support, reports Sian Norris

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The Business Banking Resolution Service (BBRS) – set up in the wake of banks mis-selling products to small businesses in the wake of the 2008 financial crash – has been accused of being “unfit for purpose” by small business owners and transparency campaigners.

The BBRS denies the accusation.

The service is intended to support small businesses to resolve disputes with their banks for free, offering an independent service that can help SMEs apply for compensation if they can prove they have been mistreated by the banks.

However, the scheme is subject to strict eligibility criteria which has led to many small business owners feeling they have been cut off from support. 

Victims of bank misbehaviour who were judged to be a concessionary case – i.e. they did not meet the eligibility criteria but can provide evidence as to why their claim should be considered – have complained that the banks have vetoed their applications. 

A spokesperson for the BBRS said that it “does not have the power to change the eligibility criteria” which was agreed “by SMEs and the banks prior to set up”. They acknowledged that “there has been some frustration that banks have rejected some concessionary cases which sit outside the criteria which banks can choose to consider”.  

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Andrew Candy ran a small design agency in the late 2000s, when he was mis-sold an interest-rate hedging product and commercial mortgage. The bank left him in an “appalling situation”, he told Byline Times

“When we came to restructuring our loans, the bank said we needed to pay a £70,000 penalty,” he said. “We were truly horrified. What we were being told had no resemblance to anything that they led us to believe we were purchasing or had assured us that they were matching.”

A decade-long battle for justice then began, with Mr Candy taking his case to both the Financial Ombudsman Service (FOS) and the Financial Conduct Authority’s (FCA) 2012 redress scheme. Despite both stating in writing that they would not engage with the commercial mortgage element of his case, Mr Candy later had this distinct complaint declined by the BBRS without review last year.

The reason given was that Mr Candy was unable to satisfy what he considered to be “the bizarre and unreasonable demands” of the service’s case assessor for documentation of “historic review processes”, despite neither the FOS and FCA carrying such a review out.

A spokesperson said that “all cases require data to support the claim and the BBRS cannot progress a case without the relevant materials. Some customers have found it difficult to find historic data relating to their case, which is why the BBRS has ‘customer champions’ to assist and support customers through this process”.

The BBRS currently excludes claims that have had access to “any review conducted independently of the relevant bank of the sale of Interest Rate Hedging Products (IRHP) where the review was conducted as a result of action by the regulator”. Claims taken to the ombudsman are also deemed ineligible. 

A spokesperson told Byline Times that “the BBRS is not, and cannot become, an appeals body for other organisations where complaints have been made” and that “the BBRS cannot examine the decisions made by the FOS, the courts or where there has already been a contractual settlement with the banks”. 

“Despite documentary evidence irrefutably proving neither the FOS or the FCA had independently reviewed the complaint I was bringing to the BBRS, it didn’t matter, I was rejected anyway” Mr Candy said. “People that were the actual victims were incredibly unhappy with the eligibility criteria that were put forward and signed off, but to then have that limited criteria disregarded or misinterpreted by the BBRS is truly abhorrent and inexcusable.”

Out of Kilter

According to the BBRS’ annual report, “expectation of the numbers of eligible cases was out of kilter with reality”. Initial estimates had suggested there would be 60,000 eligible historical cases, with 6,000 of these going on to register a complaint. 

Instead, data from Bayes Business School suggested there were only 14,000 eligible cases, of which 1,400 were expected to register with the scheme.

Clive May ran a brick-laying business in North Wales. After the financial crash put pressure on his business, he claims he was mis-sold a financial product that left him in debt and led to his business going under. He settled with the bank, but this meant he was no longer eligible for the BBRS. 

“I argued that mine was a concessionary case,” Mr May told Byline Times. “Based on the evidence we’ve given, the BBRS agreed we could go forward as concessionary. But the only problem is we had to ask the bank for its permission.”

Concessionary cases can go ahead “provided that we, the customer and the bank all agree”, states the BBRS website. It continues: “Whether or not the bank decides to reconsider the complaint, that bank will give the BBRS and the customer a written explanation in sufficient detail to enable BBRS to explain it to that customer.”

In May’s case, he claims the bank failed to agree that his case could be heard. He argues this was the wrong decision and alleges that he has been insulted by banking staff during his fight for justice, something he believes prejudiced his case. 

A spokesperson told Byline Times: “The BBRS may, in some circumstances, also be able to look at complaints that are ineligible as concessionary cases provided the BBRS, the customer and the bank all agree. The banks have agreed to act reasonably and in good faith when considering the BBRS’ request to deal with such a case.”

“While some cases that were recommended by the BBRS as concessionary cases were not progressed, many of these were taken on by the banks directly by alternative dispute resolutions such as mediation and settled following BBRS involvement,” they added.

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As of 31 December 2021, the BBRS referred 19 cases to the banks for the concessionary case process. Of these, six cases were taken forward and seven did not progress. For May, this is like “asking a burglar to agree with the victim as to whether the case should be taken forward”. 

“The BBRS was set up and supposed to be to deal with it,” Mr May said. “And it’s basically left hundreds of people despondent, with nowhere to go.”

A spokesperson for the BBRS told Byline Times: “The BBRS’s operational effectiveness was recently evaluated through a second Post-Implementation Review undertaken by an independent external panel of experts. This review found that the BBRS is doing what it was set up to do and that cases are assessed by competent people and both the Historical and Contemporary Schemes are widely accessible.”

They pointed to successful cases where claimants were eligible, where customers noted the “compassion” of the service, and how they “wouldn’t have found resolution without help from the BBRS”.

“The BBRS was established with fixed eligibility criteria and the review found that many perceive these to be too rigid and prescriptive, despite signing off on them,” the spokesperson continued. “According to the Review, the establishment of the BBRS and the rules under which it operates involved compromise and this has meant that there are some stakeholders who will always consider the organisation to ‘fall short’ of a perceived ideal.”

The review recommends that “the SME Liaison Panel, which advises the BBRS, refines its focus on what is possible within the remit of the BBRS, with particular attention on the future of the Contemporary Scheme and the recommendations made in the PIR 2 report around the potential for reviewing the eligibility criteria”.

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